Fixed Rates- These traditionally come in 10,15,30, or even 40 year terms. Your rate is fixed for the entire term of the loan. Most people feel if they have a long term outlook in staying in their property, or are on a fixed income they prefer the safety and reliability of a fixed rate loan.

Adjustable Rates-These loans may have a monthly rate change, or be fixed for a certain time period of 2,3,5,7, or 10 years. Then they turn into an adjustable rate loan.

So everyone you talk to seems to say "why would anyone ever get an adjustable". The answer is they shouldn't, unless the terms are more beneficial than a fixed. So lets say for example, you can get a fixed rate at 6.0% for 30 years, or a 7 year fixed for 5.0%. Which is better? It simply depends. If one borrower just bought their first home, and plan on living in it for 2-3 years, maybe the Arm is better. If one borrower is retired, and plan on living in their property for the rest of their lives, the fixed may be better.

Bottom line, an informed borrower should always understand the cost and rate differences between both, and compare that to their projected housing plan. They should also always been made aware of "worst case" scenarios if they held an adjustable loan for a longer time period. Understanding rates, margins, caps, and other loan features is critical.

We can help you understand all of these terms, so you can make the best informed decision.

We have also attached some valuable consumer information links on our website that may help you understand these terms better. Don't fall for any loan sales person that pushes one product over another. Bottom line all should be presented with cost differences.